Over the past few years of personal finance blogging one of the companies that I've heard recommended time and again as one of the best places to invest is Vanguard. The reasons why people love them so much include the facts that they have low costs as compared to so many other companies, they offer a diverse set of index funds to choose from, and even some of their actively managed funds are super affordable when compared to the competition.
Another thing that a lot of folks like is that it is relatively easy to buy into mutual funds at Vanguard with low initial mutual fund investments. Most vanguard funds with exceptions of one, the Vanguard STAR® Fund (which had a $1,000 minimum) had initial investments of around $3000. This past week Vanguard announced that they were lowering the initial investments for a wider range of funds to $1000 in order to make investing with Vanguard that much easier. In addition a variety of other funds have had their fund minimum lowered to $3000.
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Vanguard Lowers Target Retirement Fund Minimums
Vanguard announced that they were lowering their fund minimums for their Target Retirement Funds last week, as well as reducing and standardizing minimums for other fund types.
To help investors take the first step toward a more financially secure retirement, we're lowering the minimum initial investment for our popular Target Retirement Fund series from $3,000 to $1,000, effective immediately. Previously, only one of our funds, Vanguard STAR® Fund, had a $1,000 minimum.
“Investing early and investing regularly are two of the most important things investors can do to help ensure their retirement readiness,” said Vanguard CEO Bill McNabb. “By reducing the investment requirements for our target-date funds, we hope to encourage more individuals to participate in the financial markets.”
In addition, Vanguard is standardizing the minimum investment for Investor Shares of nearly all our other funds at $3,000. Previously, fund minimums for the affected funds ranged from $3,000 to $25,000. This change reduces the minimum investment for 15 Vanguard funds, including some of our oldest and largest actively managed funds, such as the Wellington™ Fund, Windsor™ II Fund, and Health Care Fund.
Target Retirement Funds Affected
Here's a list of the Target Retirement Funds affected by the lowered minimums:
- Target Retirement 2010
- Target Retirement 2015
- Target Retirement 2020
- Target Retirement 2025
- Target Retirement 2030
- Target Retirement 2035
- Target Retirement 2040
- Target Retirement 2045
- Target Retirement 2050
- Target Retirement 2055
Vanguard Now Even Friendlier For Newer Investors
Vanguard has been known as a friendly place for newer and experienced investors alike, but I think that this move will most likely be one that ingratiates them even more to the newer investors who previously may not have had the $3000 to start an account. $1000 is that much more accessible to newer investors who just want to test the waters and get started investing – even if they don't have a ton of money to work with.
As Vanguard mentions in their post – investing early and regularly are two very important pieces of the puzzle – and this move will most likely help a lot more people to get started earlier. I think I've mentioned in the past that I wished Vanguard would reduce the minimums on their funds – especially the target retirement funds. Others including Mike at obliviousinvestor.com has also written about how they wished Vanguard would get rid of minimums to make their funds more accessible. Now they have, and I'm sure investors everywhere are happy with the change. I know I am.
What do you think? Are you more likely to invest with Vanguard now that they've reduced their minimums for so many of their account types? Do you use Vanguard? Tell us your experience in the comments!